Payroll Technology: A 2013 Predictions List

Predicting the Payroll Technology State of Affairs for 2013

As we start a new year here at Payrolllab.com, it seems only right that we should take some time to look ahead and see what we think this year might bring in terms of changes to the payroll technology landscape. 2012 was an interesting year as far as developments go; with multiple M&A deals happening in both the payroll and broader HCM market. And from the vantage point we have in talking with both vendors and business leaders, it's relatively clear that 2013 is setting up to be just as big. Granted, within the payroll software space we've likely seen the end of major deals, but that doesn't mean that this year will be devoid of all vendor activity. After all, just last month we detailed plans that are in the works for both CloudPay and ZenPayroll; two burgeoning SaaS payroll companies that have succeeded in securing some significant funding to further develop their product lines in the cloud. Aside from the excitement these announcements have caused for business leaders perusing payroll industry solutions, the fact of the matter is that cloud payroll options are a hot commodity right now. As such, it's not beyond the realm of possibility to see one or both of these companies acquired by one of the larger players to build out the parent company's Software-as-a-Service offering. Still, business movement towards finding the right cloud payroll partner isn't the only trend likely to bear fruit in 2013. Here's our list of what we think will also be taking place this year.

Payroll Technology Prediction #1: Consolidation & Globalization

According to research from the Jeitosa Group's Going Global Survey, one of the most salient trends that can be expected to continue moving forward into 2013 is the consolidation of employee populations into a "single, global system of record". In part this development is a product of companies finally beginning to understand that ongoing business requirements revolve around the need for a complete view of their workforce and their workforce's payroll. However, while this trend has already been escalating for some time now, the increased push we're expecting to see over the coming year (and beyond) will be putting additional pressure on vendors to expand their offerings into an ever-increasing number of international locations. In fact, we're already starting to see some of these effects with the growing usage of the term "glo-cal"—a moniker designed to capture the nuances of what are the all-too-often disparate elements of global strategy paired with local specifics. If your organization is one that manages employees globally, then chances are your HCM and payroll system providers are not one in the same—an issue that creates a host of issues in terms of data access, integrity, and usability. 2013 will be the year that vendors finally dedicate the time and resources necessary to close those data gaps and begin offering a truly global, consolidated SoR. And as Jeitosa's CEO Karen Beaman recently penned, what this ultimately means is that "in the drive for greater standardization and lower costs, we will see more organizations harmonizing their multiple country payroll systems into two to three global payroll providers, a hybrid of in-house and aggregated outsourced solutions".

Payroll Technology Prediction #2: Mobility

Few trends of the past several years have had the staying power of mobile payroll; and while it may seem as though we've beaten a dead horse here at Payroll Lab by including this in our forecasted trends, the fact remains that 2013 looks to be yet another bellwether year for mobile technologies. Just take a look at what some of the leading research firms are saying. For instance, in a recent Frost & Sullivan report (on workforce management), it was uncovered that 40% of the companies the firm surveyed were using mobile technologies to gain efficiencies to boost the bottom line—and more often than not those efficiencies were being gained by leveraging the mobile form factor for handling transactional processes such as payroll, time and attendance, and benefits. Likewise, Gartner research pegged mobile-centric applications and interfaces to the #2 spot for the Top Ten Strategic Technology Trends. Still as CedarCrestone's VP of Research and Analytics Alexia Martin puts it, these adoption trends for 2013 will finally go beyond vendor hype and instead will be "driven more by real business needs to improve...key mobile-enabled processes (i.e. recruiting, payroll, learning for example)".

Payroll Technology Prediction #3: Regulation

In the U.S. alone, 2013 holds changes to income, social security, and Medicare taxes, as well as alterations to supplemental wages and a host other payroll and benefits-related reforms. In fact, both health care and immigration reform made it onto Workforce.com's 2013 Forecast as two out of only eleven major workforce trends to watch. These changes will undoubtedly alter how many organizations do business; and given the sheer number of compliance concerns now on the table will have a wide-sweeping effect on both large and small businesses alike. To get a feel for exactly what is in store in the coming year, we recommend catching up on the great work that vendor ADP has put together to apprise businesses of the latest legislative changes for 2013.

Payroll Technology Prediction #4: Outsourcing

Part and parcel with changing tax issues and broader increasing regulations is outsourcing—a trend that has been steadily growing over the past several years; largely due to a shifting compliance landscape that has even the most seasoned industry veterans finding it difficult to keep up. Faced with the daunting task of keeping up with more stringent compliance activities, a number of organizations will seek out the services of a payroll outsourcing partner to handle this aspect of their business and mitigate their risk exposure. Nevertheless, as it was the case when BPO analysts Nelson Hall conducted their 2011 outsourcing survey (in which 85% of respondents cited cost reduction as their primary business goal), we expect that the prevailing reason for why businesses choose to outsource will continue to be the enticing price. However, what we forecast will change over the coming months is an increased expectation on the part of businesses to maintain specific control and quality functions to retain the workforce insights previously gained through in-house payroll software deployments. This will effectively alter the standard operating landscape that many stalwart vendors have come to know and love. That said, while this increased flexibility that we expect business leaders will be seeking will impact vendors in the short-term, just as it was with the evolving iterations of cloud HR and payroll technologies, we similarly expect vendors to modify their own strategies quickly and start providing the new offerings that customers seek.

Payroll Technology Predictions: Some Concluding Thoughts

Whatever vertical market your business calls home, irrespective of the customers you cater to, 2013 is sure to bring some serious change your way in terms of payroll and benefits administration. As it has been every year for as long back as most remember though, the question that business leaders must ask is: do we have the right vendor partners to help weather these changes? And perhaps even more pressing...do we even know what it is that we need? 2013 looks to be a great year to answer those questions; and if the past few years are any indication, might just be a good time to add some more questions to the pile.

According to research from the Jeitosa Group's Going Global Survey, one of the most salient trends that can be expected to continue moving forward into 2013 is the consolidation of employee populations into a "single, global system of record".